India’s Urban Welfare Regime
Om Prakash Mathur
The 21st Century Indian City:
Towns, Metros, and the Indian Economy
26-27 March, 2013
University of California, Berkeley and IIHS, Bangalore
PREAMBLE
Public provision of welfare – “Welfare Regime” - is an integral part of the
development trajectories of most economies, irrespective of whether
they are developed or developing. Recent years have observed an
unprecedented expansion in the size of welfare regimes, triggered by a
maze of factors including democratization, politico–social movements,
need for food assistance under conditions of stagnant wages, ageing
etc.
Broadly, welfare regimes fall into two categories:
i.
Country-wide/national coverage, premise being that there are
services that should reach out to everyone (e.g., health). Such
regimes are non-discriminatory.
ii.
Coverage restricted to certain population groups or areas, postulate
being that growth does not reach them or that the structures and
institutions are such that they constrain growth from trickling down
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to the targeted groups or areas.
This presentation focuses on India’s Urban Welfare Regime which
aims to target the `urban poor’ and `slum settlements’. It excludes any
reference to the legendary 3-F welfare that absorbs, according to
Surjit S. Bhalla, close to 2.2 percent of the country’s gross domestic
product (GDP).
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INDIA’S URBAN WELFARE REGIME
SCOPE OF THE PRESENTATION
1.
Urban Welfare Regime: Rationale, Aims, and Purposes
2.
Financial size, including factors that enter into the determination of
its size
3.
Implementation strategy
4.
Results and Performance
5.
Prognosis – can it deliver?
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URBAN WELFARE REGIME
RATIONALE, AIMS AND PURPOSES
India’s urban welfare regime – a legacy of the 1970s – comprises a set of
public sector initiatives for poverty reduction; significantly, these initiatives
have rarely been conceptualised or analyzed as part of a `welfare regime’.
In public finance lexicon, these initiatives are nothing but a transfer of
resources, an intergovernmental transfer, to be used for poverty reduction;
it draws its strength from the Musgravian principle that redistribution and
welfare are the responsibility of higher governmental tiers. Such transfers
are said to be poverty-reducing and instruments of inclusive growth.
The rationale underlying the initiatives is simple: growth and the way it has
occurred in India, is unevenly distributed across income groups.
Additionally, there are structural impediments for growth to reach out to the
lower percentile groups. Improving equity and targeting resources to
urban poor households is the long-run aim of these initiatives.
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India’s urban welfare regime addresses four types of vulnerabilities –
•
Absence or lack of basic services. Basic services to the Urban Poor
(BSUP)
•
Lack of adequate shelter. Integrated Housing and Slum Development
Programme (IHSDP), Rajiv Awas Yojna (RAY)
•
Inadequate tenurial security. Rajiv Awas Yojna (RAY)
•
Inadequate sources of livelihood, not generating enough income.
National Urban Livelihood Mission (NULM) Swarna Jayanti Shahri
Rojgar Yojna (SJSRY)
The initiatives BSUP, IHSDP, RAY, NULM and SJSRY are designed to
neutralize the adverse impact of lack of services, inadequate shelter and
tenure, and livelihood and provide security to the urban poor households.
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URBAN WELFARE REGIME
FINANCIAL SIZE
Estimation of the financial size of the welfare regime is complex --- comprising as it does different kinds of implicit and explicit
subsidies, transfers and grants,
and is contentious
-- arguments that a substantial part of the welfare leaks out and is
mistargeted and what reaches the poor households is a fraction of
what they need to fight poverty.
Netting out what reaches the poor remains a question mark.
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In the case of urban welfare regime, the financial provisions are as under:
Years
BSUP
IHSDP
SJSRY
RAY
2011-12
15,922
6,997
7,788
679
2009-12
13,384
7,807
4,216
-
NULM
(Rs. In million)
Often argued that it will take about Rs. 72,216 million to lift the 76.5 million
urban poor (2009-10) above the poverty line – this figure represents the
difference between the current expenditure levels of the 76.5 million urban
poor and the expenditure levels needed to stay above the poverty line (Rs.
859.6 being the MPCE).
Thus, the existing provisions are grossly inadequate for neutralising urban
poverty. Moreover, urban poverty is not just consumption poverty; it
comprises of those who have inadequate shelter (93 million slum dwellers
and many more who live in highly congested conditions), those who have
insecure tenure and those who lack basic services. No estimates ever
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made to address these vulnerabilities.
IMPLEMENTATION STRATEGY
Financial partnership between the three levels of governments – thus the
financial provision for these initiatives is somewhat larger than shown in
the previous slide which registers only the central government releases;
Engagement of beneficiaries in the development of the initiatives
Designed to involve the private sector – a unique experiment in beefing up
the urban welfare regime
Linked to `reforms’ that aim at long-run sustainability of poverty reduction
strategies
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RESULTS AND PERFORMANCE
Number of beneficiaries assisted for setting up of Micro enterprises
Individual
Group
2011/12
80,775
40,568
2010/11
82,980
74,557
2009/11
86,083
64,994
Wage employment: Number of mandays of work generated
2011/12
4.22 million
2000/11
4.03 million
2009/10
2.42 million
Number of urban poor imparted skill training
2011/12
363,670
2010/11
257,176
2009/10
188,531
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PROGNOSIS: CAN IT DELIVER?
?
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Unclear of the directions – conceptually, three sets of issues arise
•
Far too many channels: Shelter, Tenurial security, Services, and
Livelihood, implemented on stand-alone basis which, prime facie,
reduce effectiveness and increase unit cost of implementation.
•
Economic and social outcomes remain undefined – do the mandays of
work created and micro enterprises set up add up to or equal or
exceed the investments made via these initiatives? Do or should these
initiatives have a economic rationale? Should the case for such a
Welfare Regime be argued on economic considerations?
•
A zero sum game: welfare regimes created to offset policy distortions.
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Thank you
opmathur@niua.org